Tag: Fraud

  • How To Check Up on Your Bookkeeper

    How To Check Up on Your Bookkeeper

    Bookkeeping is an essential part of a business. Unfortunately, many business owners tend to overlook it either due to carelessness or over-delegation of financial responsibilities. When the latter is the case, the individual(s) are in total control of the finances. Unfortunately, this can lead to financial fraud.

    This is why it is vital to check up on your bookkeeper. There are a lot of honest bookkeepers out there. But you can put measures in place to protect your business!

    Having gotten that out of the way, let’s now examine 10 ways you can put a check on your bookkeeper.

    Regular Checking of Accounting Application

    As a business owner, you must log in to your accounting application regularly. Ensure that you do a review on the financial activities happening in your company. You could do this on a daily or weekly basis, whichever one works best for you.

    It is best to do these checks after your bookkeeper has done the necessary updates. It makes it very easy to identify issues, if there are any.

    Consider Getting a Certified Public Accountant (CPA)

    Hiring a controller is always a good idea when it comes to tracking your records. But a CPA may be ideal for this. As a tax expert, a CPA goes beyond checking your bookkeeper’s work; they also handle your tax matters.

    A CPA will review your financial records thoroughly to ensure that everything matches up with your tax returns. Also, they help pinpoint deductions you may have overlooked.

    Ensure There Is Good Documentation

    Receipts for purchases made by the company must be kept. A bookkeeper may ask for them, but won’t likely keep these documents. Reconciliation and balancing of books most times require these documents.

    If they are not available, there could be expenses that are not accounted for. Some apps can fetch receipts automatically. You can use them for this purpose.

    Set up Security Protocols

    An excellent example of this is countersigning. Ensure that all checks require two signatures. Don’t sign blank checks in advance and leave them under the care of the bookkeeper. It is also essential that you examine every check before you sign them. Don’t sign in a hurry; you could be signing away your company without knowing it!

    Monthly Review of the Financial Statements

    Your financial statements help you to track your business performance. How is your business faring as compared to the last month or year? What modifications do you need to make? It is challenging to make changes when you don’t have a good knowledge of your company’s numbers.

    You’ll most likely be making guesses and thereby hurting your business. The bookkeeper should be able to give you a detailed report of everything on the statement. When everything checks out, you can “close” the books and don’t make any changes after that.

    Attach Scanned Images to Each Transaction.

    They help to give a clear and transparent representation of every transaction. It eliminates the issue of check tampering. A tampered check may mean that a bookkeeper has diverted funds without the company’s knowledge or approval.

    Have Access to Your Bookkeeper’s References

    Your bookkeeper has access to your finances and bank accounts. You need to have a way of getting to them in case of trouble. Requesting your bookkeeper’s references during the hiring process shouldn’t be a mere formality.

    You need to have reputable people vouching for them before you hire them. Also, make sure you have ready access to these references. It’ll go a long way to keep your bookkeeper in check.

    Have Regular Meetings with Your Bookkeeper and Ask for Reports

    You should have a regular discussion with your bookkeeper. They should bring you up to speed as it concerns the company’s finances. Also, ensure that what they tell you matches what is on the books.

    To this end, ask them to send daily or weekly reports. These reports will serve as a guide when you’re checking the books. If there are discrepancies, ask for an immediate explanation. 

    Make Sure Their Office and Computer Are Secure

    Bookkeepers handle very vital and delicate information, which mostly involves your finances. It is essential that they have a secure office or computer where they do their work.

    Your company’s records could fall into the wrong hands by so doing. These could include information about your bids, estimates, as well as profit and loss. You already know the implication of this.

    Outsource Your Bookkeeping

    There are professional firms that have excellent protocols in place – protocols that can eliminate dishonesty. It’s worth it to outsource your bookkeeping to any of such firms. It saves you the stress of having to check your bookkeeper.

    You also have access to all your records 24/7. All you need to do is access your QuickBooks online database and get the information you need.

    We hope that you find these 10 tips helpful. Bookkeeping is something you should never take for granted. Keep a close eye on your finances. The success or failure of your business depends on it.

    If you want more information on outsourcing your bookkeeping, please contact us today!

  • 7 TIPS TO PREVENT SMALL BUSINESS FRAUD

    7 TIPS TO PREVENT SMALL BUSINESS FRAUD

    Indeed, our world is raging with RFID hackers and identity theft that target people. Despite the size, why wouldn’t you be worried about the likelihoods of business fraud? From the small grocery store to an independent hair stylist, there are many avenues through which scammers can apply their malicious intent, and cheat you.

    No doubt, small businesses are exposed to business fraud. Yes, these businesses hire people they trust. But they can’t stop suspicious behavior—even though it’s from their esteemed partners.

    Research shows that fraud affects one in four small businesses yearly – with SMEs losing about $25.6 million annually.

    That said, small business frauds are occupational frauds, which usually ravage small businesses or start-ups. The Association for Certified Fraud Examiners (ACFE) has it that small businesses are generally more susceptible to organizational fraud than the larger ones.

    There are several reasons why these frauds occur, and we shall briefly highlight some of them.

    First, most business owners have their hands full and so have to rely on delegation. Here we see employees performing multiple functions. There are usually little or no checks and balances. It allows them to do some illegal stuff.

    Second, sometimes business owners become too trusting with employees. It can lead to the absence of formal procedure, which means things don’t get recorded. This situation makes fraudulent activities very easy and mostly unnoticed.

    Third, hiring fraudulent individuals can also make your business vulnerable to fraud. The reason is obvious.

    We have now seen certain situations that can lead to fraud. It is then vital to look at ways to prevent it.  But first, let’s take a look at some of the major fraudulent activities. Knowing this will provide awareness of how fraudsters carry out these fraudulent acts.

    Cash theft

    Cash theft is done through skimming, Larceny, or Fraudulent disbursement.

    False invoicing

    False invoicing involves presenting an invoice that does not relate to a real sale or payment. In cases like this, the perpetrators make the company pay for goods or services they did not receive.

    Identity theft

    Fraudsters or cybercriminals could steal a Company’s identity. It gives them access to the company’s vital documents.  There are also cases where these fraudsters pose as legitimate suppliers and then advise changes to existing payment arrangements.  You can uncover this type of fraud when real suppliers emerge.

    Check tampering

    Here, the fraudsters convert the organization’s funds by altering a check. Checks that have not been voided can be illegally cashed, with a forged signature.

    Payroll fraud

    An employee can make false claims for expense made and then demand a refund. Another common payroll fraud is the issue of “ghost worker.” This practice sees the payroll controller add a non-existent employee to the company’s payroll.

    If the company is operating a direct payroll deposit policy, it makes it easy for the “ghost funds” to go straight to the perpetrator’s account.

    A small business owner could have the best ideas and work hard to see the business thrive. However, fraudulent activities can threaten that success. How then can you stop this from happening? Below are 7 tips that can help prevent small business frauds in business.

    How to prevent small business frauds in business

    1. Put a fraud policy in place

    Fraud policy should indicate repercussions for committing fraud (termination of employment, prosecution). These policies should cover both the tangible and intangible assets in your company.

    2. Check the books from time to time

    It is essential that you do this as a business owner, as it helps you to ascertain that there are no discrepancies. You can ask your bank to give you the bank statements of your business accounts. It helps you monitor your cash flow.

    3. Get professionals or Accounting firms to handle your finances

    This will bring for more transparency and accountability. Also, demand for daily or weekly reports from the accounting department.

    4. Have a password policy

    Try to update or change your passwords from time to time. Also, make the passwords a bit complex or difficult to decipher.

    5. Segregate cash related functions

    Don’t let one employee perform all the accounting and bookkeeping duties. Let there be a team or department that handles that. Why? It will make them serve as watchdogs to one another.

    6. Be mindful of who you hire or do business with

     Avoid recruiting or dealing with individuals with fraudulent or dubious tendencies. Working with fraudulent people will expose your business to fraud. Avoid them!

    7. Restrict access to master file records of your vendors/clients

    Any changes to be made should require supporting documentation. It also applies to payroll as it helps to eliminate illegal payments or changes in pay rates.

    Building a business is an uphill task. When you put in so much work and effort, you should be able to rip the dividends and see your business grow. Fraud is a major threat to the growth of your business. So make sure you apply the above tips to keep your business safe and secure.